About ten years ago, this was the darling of Wall Street... rocketing up to $120 a share, before starting its long, slow slide to a bottom of just under a buck. But over the past fews months we've seen a turnaround. (Click chart to enlarge)

Higher Highs, and Higher Lows equals Bull Market in Ballard

Click to enlargeThe benefits of a fuel cell is that it has "zero" emissions at the point of use. It is quiet, stable and can use hydrogen, one of the most abundant elements in the universe, as a power source. You may remember the host of news stories where the reporter would drink the pure water that came out of the tailpipe. Ballard's products are used in backup systems in telecommunications towers, transit buses, and forklifts among other niche products.

Ballard been a leader in this technology for more than ten years and has over 2,000 patents and licenses. The company has a state-of-the-art factory and is teamed with Daimler AG (DAI) and Ford (NYSE:F) in a private venture to develop hydrogen fueled cars.

I've never been an investor in Ballard before, nor have I recommended it. But it's starting to look interesting.

Story Stocks

As is usually the case with cutting edge technologies, the story gets ahead of the reality. In the case of fuel cells there are serious barriers to meeting mass market acceptance.

There are infrastructure problems, and there are cost and pollution issues in getting the hydrogen separated from oxygen or gasoline.

That said, things are starting to turn around. This is the nature of a story stock. Just at the time when all of the early investors have given up on the stock - when the story has been so wildly disseminated as to be completely discounted - the fundamentals start to change.

The technology is on the cusp of finding a market.

For example, Protonex Technology Corporation is a small company that makes fuel cells for the military. It just picked up another $3.34 million contract from the U.S. Army.

They build a methanol-fueled generator the size of a microwave that is rugged and can run without noise for eight hours. Obviously, this is something the modern, computer-equipped army could use in the field.

They are also working to produce a propane fueled system that will be aimed at the recreational vehicle market. Protonex is a very small company and should be considered speculative. I just put it out there to show there are possiblities.

It's Wicked Cheap

Ballard's a little different. The company now has a market capitalization (number of shares times share price) of only $208.4 million. They also have $82.2 million in cash and only $2 million in debt. If you net out the cash and debt, they have a market capitalization of $128 million.

You have to think a value of just $128 million puts them in a buyout range of a number of companies. Their patents have to be worth that.

Exxon Mobil (NYSE:XOM) has $10 billion in cash. They could buy Ballard for the PR value. Ford has $32 billion in cash. That makes Ballard a rounding error.

Earnings Are Getting Better

Ballard Power Systems reported a loss of $0.08 on sales of $13 million on April 29, 2010. For the full year, analysts expect the company to post a loss of $0.33. In the year-ago period, the company reported a loss of $0.21 on sales of $8 million.

In the previous quarter, the company reported a loss of $0.01, which was better than the loss of $0.08 the market was expecting.

But again, the future looks promising. According to its website, Ballard expects to:

Grow revenues in excess of 35% over the 2009 level

Improve cash flow from operations by 30% from the 2009 level.

With this performance trajectory in 2010, Ballard expects to be positioned for positive EBTIDA performance during 2011.

The company is selling products to Motorola (MOT), FirstEnergy Corp (NYSE:FE), Plug Power (NASDAQ:PLUG) and recorded sales of five, 60-foot articulated buses last year.

Companies that go from losing money to making money tend to get noticed pretty quickly.

For example, my good friend and alternative energy expert Nick Hodge recommended JA Solar Holdings (NASDAQ:JASO) as it went from a loss of $0.21 in March of 2009, and a smaller loss of $0.06 in June of 2009, to a profit in the third quarter.

It has been profitable ever since. As you can tell the stock price doubled.